FTSE 100 companies seem to be following the ex-minister’s advice on hiring more women directors

I
t has been 100 days since Lord Davies told business it had to achieve more
boardroom equality or voluntary targets would be replaced by statutory
quotas. For FTSE 100 companies that means at least a quarter of their board
directors should be women by 2015. FTSE 350 chairmen have until September to
announce their “aspirational goals”.

For the FTSE 100, at least, things seem to be on track, said Elin Hurvenes,
founder of the Professional Boards Forum, which links chairmen with female
non-executive director (Ned) candidates. “We have been tracking female board
appointments since Christmas and the rate is about 30%,” she said. “It needs
to be at 33% to meet Davies’s targets, so it is nearly there. But the FTSE
250 is lagging at about 19%.”

That said, there have been some recent high-profile announcements in the
sector, such as Julie Chakraverty’s appointment to Aberdeen Asset Management.

The headhunting industry is also making progress on the voluntary code of
conduct that former trade minister Davies recommended it put in place. While
the final version has not yet been published, the draft code includes a
requirement for signatories to present chairmen with long lists on which at
least 30% of candidates are women.

This will make a difference despite there being no sanctions for companies
that miss the target or any requirement for the ratio to be kept on the
shortlist, one senior recruiter said. Simply being able to refer to Davies
would make it easier to challenge chairmen who had not been won over to the
diversity case, another said.

However, others suggested that the code, which is expected to be less than two
pages long, was little more than a public-relations exercise. One headhunter
said: “I have heard at least one person say, ‘We are here to support the
chairman and if he doesn’t want women on the shortlist we won’t push for
it’.”

It also appears that the women being invited to appear on these shortlists now
worry they have been selected for their gender rather than their experience.
“There is a subliminal question mark over appointments,” said Sue O’Brien,
chief executive of Norman Broadbent, the search firm. “We have had
candidates [of both sexes] question us harder about Ned roles and whether
the board is looking for a woman. Gender has come into it for the first
time.”

Even women who already hold Ned roles are asking whether the report will make
it appear they got there because of their sex rather than their
achievements, she added. Male candidates are also showing a tendency towards
“grim humour” by joking that their own chances are reduced because they are
not women, said Kit Bingham at the search firm Odgers Berndtson.

But one female headhunter said women should stop worrying about tokenism and
instead recognise that the report’s recommendations gives them a bit of
extra leverage to work with — their male rivals would certainly treat it as
such, given the chance.

Hurvenes added: “Women need to pipe down about tokenism and all that rubbish.
They have an opportunity. If you are appointed, it is because someone thinks
you are good.”

Andrew Roscoe, UK managing partner at Egon Zehnder International, the search
company, said the report’s publication had brought publicity and increased
attention to the issue but was not a watershed event. “It is not as though
suddenly everyone has changed,” he said. “Over the last several years our
more thoughtful clients and boards have been interested in diversity at all
levels.”

Boards are taking their time to consider the issue rather than giving in to
any sort of knee-jerk reaction, O’Brien said. “Boards have to make sure they
have the structure right in terms of regulation and corporate governance.
They need people who have the right fit and meet the needs of the business,
and they want to behave appropriately when it comes to sourcing candidates.”

However, they are making it clear that they want to see women on candidate
lists, Bingham said. “They are not saying ‘we will appoint a woman’ but they
are saying ‘we want to see female candidates’.”

Some are also becoming more open to candidates who do not already have main
board experience, although this is far from universal. “There is recognition
that they need to open up the criteria in terms of what they need as core
skills ... but there are [also] a lot of people — often finance directors
rather than chairmen or nominations committees — saying that they do not
want their boards to be a training ground,” said Katushka Giltsoff, a
partner at the Miles Partnership.

Not all chairmen are happy, said Peninah Thomson, an executive coach and
author of A Woman’s Place is in the Boardroom. At least one FTSE 100 board
felt “dragooned” into making changes, she said. “There was a little bit of
resentment, of feeling pushed into it, of it being politically correct.”

Still, most boards would rather deal with things themselves than have EU or
other legislation take the lead. “However they might feel personally, they
know that they have to do enough to avoid being told what to do by someone
else,” said Roscoe.

Another possible stumbling block associated with appointing candidates who
come from outside the corporate mainstream is that it can take much longer
and cost more to find them. In return the search firm will be paid £30,000
to £50,000, which is much less than it would earn for filling an equivalent
executive role, Hurvenes said.

“When a company wants a new chief executive it wants him or her within three
months, but I have spoken to chairmen who say ‘we are looking for a Ned but
we will take our time to find the right candidate’ and it could be a year or
two years,” she said.

“So maybe there needs to be more money in Ned search to make it more
interesting [to headhunters], or maybe boards need to plan a bit more and be
more structured about their timing.”

Blue chips lead the way

The FTSE 100 has made a reasonable start, with women making up 28% of
directors appointed between February 24, when Lord Davies’s report was
published, and May 25, according to figures from BoardEx, the business
intelligence service. This brings their overall representation up to 14% —
still some way short of the 25% target for 2015. The FTSE 250 has done less
well: women made up only 19% of appointments in this period and 9% of all
directors.

Women who have recently been appointed to FTSE 100 boards include Lesley Knox,
chairman of Alliance Trust, and Helen Weir, formerly group executive
director retail at Lloyds Banking Group, who has joined Dambisa Moyo, an
economist, at SAB Miller.

Melanie Gee, a managing director in UK investment banking at Lazard, became
the first woman on the board of Weir Group.

Judy Gibbons, a venture partner at Accel and a Ned at Guardian Media Group,
added Hammerson to her Ned portfolio. Tessa Bamford, a Ned at Barratt
Developments and Cantos Communications, joined Wolseley, the building
materials supplier. Roxanne Decyk joined the board of Petrofac as a Ned in
March.